Conroy v. Keith Cty. Bd. of Equal.

196 	288 NEBRASKA REPORTS
with the terms of probation, the monitoring attorney shall
report the same to relator.
VI. CONCLUSION
It is the judgment of this court that respondent should be
and hereby is suspended from the practice of law for a period
of 45 days, effective immediately. It is the further judgment
of this court that upon completion of the period of suspen-
sion and reinstatement to the bar, respondent shall be placed
on monitored probation for 2 years, subject to the terms set
forth above.
Judgment of suspension.
mccormack, J., not participating.
kim conroy, tax commissioner, and ruth sorenson,
property tax administrator, appellants, v.
keith county Board of equalization and
central neBraska puBlic power and
irrigation district, appellees.
846 N.W.2d 634
Filed May 23, 2014. 	No. S-13-277.
1. Taxation: Judgments: Appeal and Error. An appellate court reviews decisions
rendered by the Tax Equalization and Review Commission for errors appearing
on the record.
2. Judgments: Appeal and Error. When reviewing a judgment for errors appear-
ing on the record, an appellate court’s inquiry is whether the decision conforms
to the law, is supported by competent evidence, and is not arbitrary, capricious,
or unreasonable.
3. Taxation: Appeal and Error. An appellate court reviews questions of law aris-
ing during appellate review of decisions by the Tax Equalization and Review
Commission de novo on the record.
4. Judgments: Jurisdiction. Jurisdictional questions that do not involve a factual
dispute present questions of law.
5. Constitutional Law: Intent. Constitutional provisions are not open to construc-
tion as a matter of course; construction is appropriate only when it has been
demonstrated that the meaning of the provision is not clear and that construction
is necessary.
6. Constitutional Law: Courts: Intent. If the meaning is clear, the Nebraska
Supreme Court gives a constitutional provision the meaning that laypersons
would obviously understand it to convey.
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:35 AM CST

CONROY v. KEITH CTY. BD. OF EQUAL. 	197
Cite as 288 Neb. 196
7. Jurisdiction: Appeal and Error. An appellate court has a duty to raise and
determine any jurisdictional issue of its own accord.
8. Constitutional Law: Statutes. The rules of statutory interpretation apply to con-
stitutional interpretation as well.
9. Statutes. When a statute specifically provides for exceptions, items not excluded
are covered by the statute.
10. Constitutional Law. In the interpretation of the Constitution, a specific clause
will be given effect as against a general clause in such manner as to give mean-
ing to both, and the language of the specific clause will not be restricted by the
language of the general clause.
11. 	Appeal and Error. An appellate court is not obligated to engage in an analysis
that is not necessary to adjudicate the case and controversy before it.
Appeal from the Tax Equalization and Review Commission.
Affirmed in part, and in part vacated.
Jon Bruning, Attorney General, and Jonathan D. Cannon,
Special Assistant Attorney General, for appellants.
Randy Fair, Keith County Attorney, for appellee Keith
County Board of Equalization.
Charles D. Brewster, of Anderson, Klein, Swan & Brewster,
for appellee Central Nebraska Public Power and Irrigation
District.
heavican, c.J., wright, connolly, stephan, mccormack,
miller-lerman, and cassel, JJ.
wright, J.
I. NATURE OF CASE
For tax year 2011, the county assessor of Keith County,
Nebraska, decided to assess property taxes on several parcels
of land that were owned by Central Nebraska Public Power
and Irrigation District (Central) but leased to private parties. In
regard to each leased parcel, the county assessor sent a “Notice
of Taxable Status” to Central. Central protested the tax assess-
ment, and the Keith County Board of Equalization (Board)
recommended “approving Central’s protests and not tax[ing]
the land.”
The Tax Commissioner and the Property Tax Administrator
of the Nebraska Department of Revenue appealed to the Tax
Equalization and Review Commission (TERC), which affirmed

198 	288 NEBRASKA REPORTS
the Board’s decision that the relevant parcels “should not
be taxed,” because Central had already made a payment “in
lieu of tax” for that year pursuant to article VIII, § 11, of the
Nebraska Constitution. The Tax Commissioner and Property
Tax Administrator now appeal from TERC’s order. We affirm
in part, and in part vacate TERC’s order.
II. SCOPE OF REVIEW
[1-3] We review TERC decisions for errors appearing on the
record. Lozier Corp. v. Douglas Cty. Bd. of Equal., 285 Neb.
705, 829 N.W.2d 652 (2013). When reviewing a judgment for
errors appearing on the record, our inquiry is whether the deci-
sion conforms to the law, is supported by competent evidence,
and is not arbitrary, capricious, or unreasonable. Id. We review
questions of law arising during appellate review of TERC deci-
sions de novo on the record. Id.
[4] Jurisdictional questions that do not involve a factual
dispute present questions of law. Pinnacle Enters. v. City of
Papillion, 286 Neb. 322, 836 N.W.2d 588 (2013).
[5,6] As in statutory interpretation, the construction of con-
stitutional provisions requires us to apply basic tenets of inter-
pretation. Constitutional provisions are not open to construction
as a matter of course; construction is appropriate only when it
has been demonstrated that the meaning of the provision is not
clear and that construction is necessary. Banks v. Heineman,
286 Neb. 390, 837 N.W.2d 70 (2013). If the meaning is clear,
we give a constitutional provision the meaning that laypersons
would obviously understand it to convey. City of North Platte
v. Tilgner, 282 Neb. 328, 803 N.W.2d 469 (2011).
III. FACTS
The original appellants were Douglas A. Ewald, who served
as the Tax Commissioner at the time the appeal was initi-
ated, and Ruth Sorensen, Property Tax Administrator, of the
Department of Revenue. After this appeal was argued and sub-
mitted, we sustained the appellants’ motion to substitute Kim
Conroy, the current Tax Commissioner, for Ewald. Hereinafter,
we refer to the appellants as “the Department.”
Central is a political subdivision of the State of Nebraska
that owns and manages Lake McConaughy and over 38,000

CONROY v. KEITH CTY. BD. OF EQUAL. 	199
Cite as 288 Neb. 196
acres of land surrounding it. Central provides irrigation, hydro-
power generation, endangered species management, and recre-
ational opportunities for the public. As a public power and irri-
gation district, Central makes an annual payment in lieu of tax
pursuant to article VIII, § 11. The record reflects that Central
made a payment in lieu of tax for tax year 2011.
This 	appeal 	involves 	13 	parcels 	of 	land 	around 	Lake
McConaughy that Central leases to other parties. Four of
the parcels are leased to private businesses that put the land
to commercial use. Eight of the parcels are leased to Lake
McConaughy Lessees, Inc., which in turn sublets the parcels
to individuals for residential use. The final parcel is leased
directly to an individual who uses the land for a single-family
residence. In all cases except one, the lessees or sublessees,
and not Central, own the improvements on the parcels.
For tax year 2011, the Keith County assessor determined
that Central was liable for property taxes on the relevant
parcels, because the parcels were being “leased out for resi-
dential or commercial use” and should be “treated uniformly
& equitably with other governmental properties leased out
for other than public purposes.” Upon receiving a “Notice of
Taxable Status” for each parcel, Central filed protests with
the Board, claiming that the parcels were exempt from taxa-
tion under Neb. Rev. Stat. § 77-202(1)(a) (Supp. 2011). This
statute provides in pertinent part that property of the state or
a governmental subdivision is exempt from taxation when it is
used for a public purpose. The Board recommended “approving
Central’s protests and not tax[ing] the land.”
In the case of all 13 parcels, the Department appealed the
Board’s determinations to TERC, alleging that the parcels
were not being used for a public purpose. TERC sent notice
of the appeals to the Board, Central, and the Department, but
not to the lessees of the parcels. It held a consolidated hear-
ing at which the parties adduced evidence as to the use of
the parcels by the lessees or sublessees, Central’s reasons for
leasing the parcels, and Central’s obligations to manage Lake
McConaughy. During the hearing, the Department asked TERC
to take judicial notice of the legislative history of several stat-
utes governing the taxation of public property. TERC stated

200 	288 NEBRASKA REPORTS
that it would take “statutory notice” of the legislative history
“to the extent allowed in [its] own rules.”
The Department argued that to the extent any of the relevant
parcels were not being used for a public purpose, the parcels
were subject to taxation under article VIII, § 2, of the Nebraska
Constitution, regardless of the fact that Central had made a
payment in lieu of tax for tax year 2011. It asserted that leas-
ing the relevant parcels to private individuals for residential or
commercial use was not a public purpose. Central argued that
the dominant purpose of leasing the relevant parcels was to
provide a “buffer zone” for Lake McConaughy as required by
Central’s Federal Energy Regulatory Commission permit and
that the parcels were thus used for a public purpose.
TERC affirmed the decisions of the Board. It rejected the
argument that Central’s property tax liability was determined
based on the use of its property, pursuant to article VIII, § 2.
Consequently, TERC did not decide whether the relevant par-
cels were used for a public purpose. Instead, TERC concluded
that the applicable issue was Central’s payment in lieu of tax
under article VIII, § 11. It found that § 11 was “consistent
and harmonious” with the public purpose requirement of § 2,
because § 2 “specifically limits the ability of the Legislature to
impose or authorize property taxes or further payments in lieu
of property taxes to those instances as provided by law.”
TERC found it was “uncontested that Central is a political
subdivision organized primarily for the production of irriga-
tion and electricity and that Central has made annual pay-
ments in lieu of taxes as required by Article VIII, Section 11
of the Nebraska Constitution.” It also found that the language
of § 11 prevented the assessment of property taxes on any of
Central’s land. Accordingly, TERC held that Central was “not
liable for additional tax obligations for real property in these
appeals.” It ordered that there should be “no assessed value”
and “no separate property tax obligation” for the relevant
parcels for tax year 2011, because “any and all property tax
obligations [had] been included in Central’s payment in lieu
of taxes.”
The Department timely appeals. Pursuant to our statutory
authority to regulate the dockets of the appellate courts of this

CONROY v. KEITH CTY. BD. OF EQUAL. 	201
Cite as 288 Neb. 196
state, we moved the case to our docket. See Neb. Rev. Stat.
§ 24-1106(3) (Reissue 2008).
IV. ASSIGNMENTS OF ERROR
The Department principally assigns that TERC erred by
concluding pursuant to article VIII, § 11, that property held by
a public power and irrigation district upon which payments in
lieu of tax are made is exempt from all other taxes, regardless
of whether the property is being used for a public purpose.
Specifically, the Department assigns, summarized and restated,
that TERC erred in concluding that its interpretation of article
VIII, § 2, was consistent and harmonious with § 11; in fail-
ing to consider Nebraska statutes that create a mechanism for
imposing taxes upon those who lease property from the state or
a governmental subdivision; and in failing to address whether
the relevant parcels were being used for a public purpose. The
Department also assigns that TERC erred by taking “statutory
notice” and not judicial notice of the legislative history offered
by the Department.
V. ANALYSIS
1. Jurisdiction
The Department initially claimed that it filed its appeals
with TERC pursuant to Neb. Rev. Stat. § 77-202.04 (Cum.
Supp. 2010), under which its appeals would not have been
timely. In responding to the Department’s appeals to TERC,
Central had alleged that the appeals were untimely and moved
to dismiss all 13 appeals, but TERC did not rule on the matter
and Central did not raise the issue on appeal. The Department
has since abandoned its claim that its appeals were filed under
§ 77-202.04.
[7] Nonetheless, an appellate court has a duty to raise
and determine any jurisdictional issue of its own accord.
See Pinnacle Enters. v. City of Papillion, 286 Neb. 322, 836
N.W.2d 588 (2013). Therefore, we directed the parties to file
supplemental briefs on the question whether the Department
had timely filed its appeals from the Board’s decisions.
In an appeal from the determination of a county board
of equalization, Neb. Rev. Stat. § 77-5013(2) (Cum. Supp.

202 	288 NEBRASKA REPORTS
2012) states generally that “[i]f no date is otherwise provided
by law, then an appeal shall be filed within thirty days after
the decision, order, determination, or action appealed from is
made.” In their supplemental briefs, both parties argue that the
Department’s appeals were governed by one of these alterna-
tive appellate deadlines. We agree.
As contemplated by § 77-5013(2), there is an alternative
timeframe for an appeal from a determination whether prop-
erty of the state or a governmental subdivision is used for
a public purpose. See Neb. Rev. Stat. § 77-202.12 (Reissue
2009). The procedure for such an appeal is set in motion
when the county assessor sends notice of taxable status to
the governmental entity. See id. If the governmental entity
has leased the property and does not intend to voluntarily pay
the tax, it is to forward the notice to the lessee. See id. The
governmental entity and the lessee can appeal the taxation to
the county board of equalization. See id. In turn, the decision
of the county board of equalization can be appealed to TERC.
See id. Such an appeal must be made “on or before June 1.”
See id.
In the instant case, the parties availed themselves of the
procedure in § 77-202.12. The county assessor sent a “Notice
of Taxable Status” to Central for each of the relevant parcels.
But Central, instead of forwarding the notices to its lessees,
filed protests with the Board. The Board approved Central’s
protests, and the Department appealed to TERC.
Given the manner in which the proposed taxation and the
protests were framed, the issue to be decided by the Board, and
the determination from which the Department appealed, was
whether the relevant parcels were used for a public purpose.
The county assessor sought to assess property taxes against
Central on the ground that the parcels were not being used for
a public purpose. She recommended to the Board that Central’s
parcels “be treated uniformly & equitably with other govern-
mental properties leased out for other than public purposes.” In
its protests, Central alleged that the parcels were being used for
a public purpose and were thus exempt under § 77-202(1)(a).
The Board recommended “approving Central’s protests and not
tax[ing] the land.”

CONROY v. KEITH CTY. BD. OF EQUAL. 	203
Cite as 288 Neb. 196
Once the appeals were docketed with TERC, Central’s pay-
ment in lieu of tax became the applicable issue, and TERC did
not decide whether the parcels were being used for a public
purpose. But this does not alter the fact that the appeals were
taken pursuant to § 77-202.12.
For the aforementioned reasons, the Department’s appeals
were governed by the June 1 deadline of § 77-202.12(3). The
Department filed its appeals with TERC on June 1, 2011. As
such, the Department’s appeals were timely and TERC had
subject matter jurisdiction.
However, TERC could not consider whether property taxes
on the relevant parcels could be assessed against Central’s
lessees without exceeding its jurisdiction in this case. TERC
affirmed the Board’s approval of Central’s protests. But TERC
also ordered that the “Subject Properties should not be taxed,”
that there should be “no assessed value” and “no separate
property tax obligation” for the relevant parcels, and that
“any and all property tax obligations” on the parcels were
covered by Central’s payment in lieu of tax. These orders did
not determine the use of the respective parcels but had impli-
cations regarding the lessees, against whom property taxes
on the parcels might be assessed pursuant to Neb. Rev. Stat.
§ 77-202.11(1) (Reissue 2009) if the use was not an authorized
public use. Although the order was limited to the 2011 tax year,
through these orders, TERC precluded the assessment of prop-
erty taxes on the parcels against the lessees.
The lessees had not been sent notice by the county assessor
or Central, despite the fact that §§ 77-202.11 and 77-202.12
provide direct and indirect methods, respectively, for provid-
ing such notice. The lessees were not parties to the protests
before the Board, even though lessees of public property have
the ability to protest under § 77-202.12(2). The lessees were
not made parties in the appeals before TERC, and they did
not intervene.
Without the lessees being parties to the action, TERC could
not determine whether there should be a separate tax obliga-
tion on the parcels or whether the parcels had an assessed
value. Furthermore, for reasons that we will explain later in
this opinion, TERC could not make a determination as to the

204 	288 NEBRASKA REPORTS
lessees’ tax obligations without also determining whether the
parcels were or were not used for a public purpose. TERC
did not make this determination as to public purpose, and
such determination was not required in order for TERC to
conclude that Central was not liable for the assessments on
the parcels.
Because TERC lacked jurisdiction to decide whether prop-
erty taxes on the relevant parcels could be assessed against
the lessees, this court necessarily lacks jurisdiction to review
that aspect of TERC’s decision. Even so, we have the power
to “determine whether [we lack] jurisdiction over an appeal
because the lower court lacked jurisdiction to enter the order;
to vacate a void order; and, if necessary, to remand the cause
with appropriate directions.” See In re Interest of Trey H., 281
Neb. 760, 767, 798 N.W.2d 607, 613 (2011).
Despite the fact that TERC lacked jurisdiction to deter-
mine whether property taxes on the relevant parcels could be
assessed against the lessees, TERC had jurisdiction to consider
Central’s tax liability. Our jurisdiction is similarly limited to
review of that question.
2. whether property taxes can Be
assessed against central
The remaining question is: Did Central’s payment in lieu
of tax exempt it from liability for property taxes regardless
of whether the parcels were used for an “authorized pub-
lic purpose”? TERC concluded that “Central is not liable
for additional tax obligations” for tax year 2011, because
Central had made a payment in lieu of tax for that year. We
agree and, therefore, affirm that part of TERC’s order that
Central was not liable for additional tax obligations on the
relevant parcels.
(a) Effect of Article VIII, § 11,
Payment in Lieu of Tax
Central made its payment pursuant to article VIII, § 11,
which states in pertinent part as follows:
Every 	public 	corporation 	and 	political 	subdivision
organized primarily to provide electricity or irrigation

CONROY v. KEITH CTY. BD. OF EQUAL. 	205
Cite as 288 Neb. 196
and electricity shall annually make the same payments in
lieu of taxes as it made in 1957, which payments shall be
allocated in the same proportion to the same public bodies
or their successors as they were in 1957.
. . . The payments in lieu of tax as made in 1957,
together with any payments made as authorized in this
section shall be in lieu of all other taxes, payments in
lieu of taxes, franchise payments, occupation and excise
taxes, but shall not be in lieu of motor vehicle licenses
and wheel taxes, permit fees, gasoline tax and other such
excise taxes or general sales taxes levied against the pub-
lic generally.
(Emphasis supplied.)
As in statutory interpretation, the construction of constitu-
tional provisions requires us to apply basic tenets of interpreta-
tion. Constitutional provisions are not open to construction as
a matter of course; construction is appropriate only when it
has been demonstrated that the meaning of the provision is not
clear and that construction is necessary. Banks v. Heineman,
286 Neb. 390, 837 N.W.2d 70 (2013). If the meaning is clear,
we give a constitutional provision the meaning that laypersons
would obviously understand it to convey. City of North Platte
v. Tilgner, 282 Neb. 328, 803 N.W.2d 469 (2011).
As it relates to whether Central is obligated to pay property
taxes in addition to making a payment in lieu of tax, the mean-
ing of article VIII, § 11, is clear. Central’s payment in lieu of
tax for a particular tax year eliminated its liability for property
taxes in that same year.
Article VIII, § 11, requires “[e]very public corporation and
political subdivision organized primarily to provide electric-
ity or irrigation and electricity” to make an annual payment
“in lieu of tax.” “In lieu of” means “in the place of” or
“instead of.” Webster’s Third New International Dictionary of
the English Language, Unabridged 1306 (1993). Thus, a pay-
ment made “in lieu of” a tax is a payment made instead of that
tax. Any payment made “in lieu of tax” under § 11 is in lieu of
“all other taxes” except the specific taxes or fees described in
the Nebraska Constitution. We interpret “all” according to its

206 	288 NEBRASKA REPORTS
plain and ordinary sense—“the whole amount or quantity of.”
Webster’s, supra at 54.
[8,9] We also interpret the phrase “in lieu of all other taxes”
in light of the exceptions listed. The rules of statutory interpre-
tation apply to constitutional interpretation as well. See Hall
v. Progress Pig, Inc., 259 Neb. 407, 610 N.W.2d 420 (2000).
One of these rules provides that “‘[w]hen a statute specifically
provides for exceptions, items not excluded are covered by the
statute.’” See Chapin v. Neuhoff Broad.-Grand Island, Inc.,
268 Neb. 520, 527, 684 N.W.2d 588, 593 (2004) (alteration
in original), quoting Knight v. Johnson, 741 S.W.2d 842 (Mo.
App. 1987). We apply this rule when interpreting article VIII,
§ 11, which specifically provides that certain taxes are not
covered by a payment in lieu of tax. The language of § 11 does
not include property taxes within this exception. This omission
means that property taxes are covered by the phrase “all other
taxes.” Accordingly, property taxes are among the taxes cov-
ered by a payment in lieu of tax.
(b) Article VIII, § 2, Public Purpose
Requirement Not Relevant
A payment in lieu of tax made pursuant to article VIII, § 11,
has the effect of exempting Central from paying property taxes
by taking the place of any property tax obligations it might
otherwise have been required to pay for that tax year. But it is
incorrect to read § 11 as “exempting” the parcels in question.
The language of § 11 does not indicate that the property of
political subdivisions governed by § 11 is completely exempt
from taxation.
Despite this distinction between Central’s exemption by pay-
ment in lieu of tax and an exemption for the property itself, the
Department argues that TERC erred by failing to consider the
public purpose requirement found in article VIII, § 2, which
relates to the exemption of public property. The Department
claims it was error for TERC to conclude that article VIII,
§ 11, made consideration of public purpose unnecessary. We
do not agree. Consideration of the parcels’ use was not neces-
sary for TERC’s determination that Central was not liable for
property taxes.

CONROY v. KEITH CTY. BD. OF EQUAL. 	207
Cite as 288 Neb. 196
(i) Analysis of Constitutional
Language
Article VIII, § 2, exempts the property of the state or a
governmental subdivision from taxation if it is used for an
authorized public purpose and gives the Legislature discretion
to decide how to treat public property that is not used for an
authorized purpose. Section 2 provides:
The property of the state and its governmental subdivi-
sions . . . shall be exempt from taxation to the extent such
property is used by the state or governmental subdivision
for public purposes authorized to the state or governmen-
tal subdivision by this Constitution or the Legislature. To
the extent such property is not used for the authorized
public purposes, the Legislature may classify such prop-
erty, exempt such classes, and impose or authorize some
or all of such property to be subject to property taxes or
payments in lieu of property taxes except as provided
by law.
(Emphasis supplied.)
The phrase “except as provided by law” indicates that other
laws, including provisions of the Nebraska Constitution, may
limit the Legislature’s ability to tax a governmental subdivi-
sion which has property not used for a public purpose. The
Legislature’s broad discretion regarding such taxation must
yield to more specific limitations when such limitations are
imposed by the Nebraska Constitution.
Article VIII, § 11, provides a specific limitation on the
Legislature’s ability to assess property taxes against a political
subdivision that provides electricity or irrigation and electric-
ity. This provision does not completely limit the Legislature’s
ability to tax the public property of such governmental sub-
divisions, but it does place a limitation on the Legislature’s
power to hold certain parties liable for such taxes. See § 11.
Therefore, article VIII, § 2, requires deference to § 11 and the
tax limitation provided therein.
[10] 	Such 	deference 	is 	consistent 	with 	our 	principles
of constitutional interpretation. In the interpretation of the
Constitution, a specific clause will be given effect as against
a general clause in such manner as to give meaning to both,

208 	288 NEBRASKA REPORTS
and the language of the specific clause will not be restricted
by the language of the general clause. Garrotto v. McManus,
185 Neb. 644, 177 N.W.2d 570 (1970). Article VIII, §§ 2 and
11, each discuss the payment of taxes by political subdivisions.
Section 2 applies to all governmental subdivisions. But § 11
applies to only one specific type of governmental subdivi-
sion—those organized for the purpose of providing electricity
or irrigation and electricity. Because § 11 is the more specific
provision, we will not interpret it as being limited by the lan-
guage of § 2.
Our principles of constitutional construction also constrain
us from adding words to the constitutional language as written.
See Banks v. Heineman, 286 Neb. 390, 837 N.W.2d 70 (2013).
The language of article VIII, § 11, does not indicate that a pay-
ment in lieu of tax takes the place of a political subdivision’s
tax obligations only to the extent its property is used for an
authorized public purpose. Rather, § 11 provides that such pay-
ments “shall be in lieu of all other taxes.” As such, we will not
read a public purpose requirement into § 11.
The Department highlights that article VIII, § 2, begins with
the phrase “Notwithstanding Article I, section 16, Article III,
section 18, or Article VIII, section 1 or 4, of this Constitution
or any other provision of this Constitution to the contrary . . . .”
We acknowledge that this language gives § 2 precedence over
contrary constitutional provisions. However, we do not accept
the Department’s premise that article VIII, § 11, is contrary
to § 2. Section 2 contemplates that the Legislature’s ability to
tax public property not used for a public purpose may be con-
strained by other laws. Therefore, a provision such as § 11 that
imposes tax limitations is not inherently inconsistent with § 2.
Furthermore, §§ 2 and 11 can be interpreted harmoniously, as
we will explain below.
(ii) Article VIII, §§ 2 and 11, Can Be
Interpreted Harmoniously
Contrary to the arguments of the Department, an interpreta-
tion that declines to read a public purpose requirement into
article VIII, § 11, does not make it conflict with article VIII,
§ 2, or “misconstrue[]” the relevant constitutional provisions.

CONROY v. KEITH CTY. BD. OF EQUAL. 	209
Cite as 288 Neb. 196
See brief for appellants at 13. The statutory scheme that allows
for the assessment of property taxes against the lessees of pub-
lic property gives effect to § 2 without disregarding the limita-
tions imposed by § 11.
Article VIII, § 2, gives the Legislature the authority to
decide how it will treat public property that is not used for
an authorized purpose. Among other things, the Legislature
is vested with the specific authority to “impose or authorize
some or all of such property to be subject to property taxes.”
See § 2.
Pursuant to this authority, the Legislature enacted a statutory
scheme that places liability for property taxes on the lessees
of public property not used for an authorized purpose. Section
77-202.11(1) provides that “[l]eased public property, other than
property leased for a public purpose as set forth in subdivision
(1)(a) of section 77-202, shall be taxed or exempted from taxa-
tion as if the property was owned by the leaseholder.” Taxes
assessed against the lessee
shall be due and payable in the same manner as other
property taxes and shall be a first lien upon the personal
property of the person to whom assessed until paid and
shall be collected in the same manner as personal prop-
erty taxes as provided in [Neb. Rev. Stat. §§] 77-1711 to
77-1724 [(Reissue 2009 & Cum. Supp. 2010)].
§ 77-202.11(3).
As with all lessees of public property, lessees of the prop-
erty of a political subdivision organized primarily to provide
electricity or irrigation and electricity may be subject to taxa-
tion under § 77-202.11. Article VIII, § 11, does not exempt
such lessees, and the language of the statute provides no
exemptions, see § 77-202.11. Rather, the statute contemplates
that lessees may be taxed for property owned by a political
subdivision even if the political subdivision makes a pay-
ment in lieu of tax under § 11. The statute provides: “Except
as provided in Article VIII, section 11, of the Constitution of
Nebraska, no in lieu of tax payments . . . shall be made with
respect to any leased public property to which this section
applies.” § 77-202.11(5) (emphasis supplied). This evinces
the Legislative intent that in relation to public property owned

210 	288 NEBRASKA REPORTS
by a political subdivision governed by § 11, property taxes
(assessed against the lessee) and a payment in lieu of tax may
both be collected.
Even if § 77-202.11 were ambiguous on this issue, the
legislative history indicates that the Legislature’s intent in
enacting § 77-202.11 was to allow for the assessment of prop-
erty taxes against the lessees of property owned by a political
subdivision making a payment in lieu of tax under article VIII,
§ 11. Section 77-202.11 was enacted by L.B. 271. See 1999
Neb. Laws, L.B. 271. During floor debate on L.B. 271, the
bill’s sponsor discussed how it would apply to Central’s les-
sees: “If this bill is passed . . . the county assessors will be
assigning a value to the underlying land, and because there is
a lease . . . that value will then be included on the tax rolls,
but it won’t be a liability of Central, it will be a liability of
the leaseholder . . . .” See Floor Debate, Revenue Committee,
96th Leg., 1st Sess. 3775 (Apr. 12, 1999). The sponsor also
stated that under L.B. 271, the lessees of public utilities would
be required to “pay a tax on the underlying ground.” See Floor
Debate, Revenue Committee, 96th Leg., 1st Sess. 6533 (May
12, 1999).
Allowing for taxation of the lessees of political subdivisions
governed by article VIII, § 11, carries out the purpose of article
VIII, § 2, to tax or exempt public property based upon whether
it is used for an authorized public purpose. The statute allows
for taxation of lessees when the leased public property is not
being used for an authorized purpose. See § 77-202.11(1).
Leased public property that is used for an authorized public
purpose is specifically exempted. See id.
At 	the 	same 	time, 	the 	statutory 	scheme 	created 	by
§ 77-202.11 respects the limitations of article VIII, § 11,
that prevent the assessment of property taxes against politi-
cal subdivisions making a payment in lieu of tax. Under
§ 	77-202.11(3), 	lessees 	can 	be 	assessed 	property 	taxes
directly, without exposing the political subdivision to liabil-
ity for taxes upon the property leased to private individuals
or entities. The statute specifically states that “[t]he state or
its governmental subdivisions shall not be obligated to pay
the taxes upon failure of the lessee to pay. . . . No lien or

CONROY v. KEITH CTY. BD. OF EQUAL. 	211
Cite as 288 Neb. 196
attachment shall be attached to the property of the state or
the governmental subdivisions for failure of the lessee to pay
the taxes due.” See id. Because a political subdivision is not
liable for the taxes assessed against its lessees, the assess-
ment of property taxes on the lessees of property owned by
political subdivisions making a payment in lieu of tax does
not violate § 11.
Section 77-202.11 creates a statutory scheme that is con-
sistent with both the public purpose requirement of article VIII,
§ 2, and payments in lieu of tax made pursuant to article VIII,
§ 11. Section 11 exempts political subdivisions which make
payments in lieu of tax from taxation. Section 2 and the statu-
tory scheme enacted pursuant thereto permit the Legislature
to impose property taxes on lessees of those subdivisions to
the extent the property is not used for an authorized public
purpose. Under this scheme, the public purpose requirement of
§ 2 applies to the taxation of lessees despite the fact that the
political subdivisions are exempt as per § 11.
The Department agrees that article VIII, §§ 2 and 11, have
been harmonized through the legislative scheme allowing for
taxation of Central’s lessees. But it further asserts that TERC
erred by not considering whether the lessees should have been
taxed under this scheme for property not used for an authorized
public purpose. For the reasons noted previously, TERC did
not have jurisdiction to reach the issue of the lessees’ liability.
Therefore, we do not consider the Department’s arguments in
relation to whether the lessees should have been taxed.
(c) Conclusion as to Central
Article VIII, § 11, controls the determination whether Central
is liable for property taxes. Under § 11, Central’s payment in
lieu of tax for tax year 2011 took the place of any property
tax obligations it might otherwise have been required to pay,
regardless of the purpose for which the property was being
used. Therefore, Central was not obligated to pay property
taxes once it made the annual payment in lieu of tax.
TERC did not err in reading article VIII, §§ 2 and 11, to be
consistent and harmonious or in concluding, based on § 11,
that Central was not subject to property taxes for tax year

212 	288 NEBRASKA REPORTS
2011, because it had already made a payment in lieu of tax for
that year.
Under § 77-202.11, public purpose would have been deter-
minative of the lessees’ tax liability on the relevant parcels.
However, for the reasons noted previously, TERC did not
have jurisdiction to reach the issue of the lessees’ liability. We
vacate that part of TERC’s order which stated that there should
be no separate property tax obligation for the subject proper-
ties, there should be no assessed value of the subject property,
and any and all property tax obligations had been included in
Central’s payment in lieu of tax. We make no determination
whether the lessees can be assessed property taxes for 2011
and subsequent tax years.
3. other assignment of error
[11] The only remaining assignment of error is that TERC
erred in taking “statutory notice” and not judicial notice of the
legislative history offered by the Department. Because this case
presents questions of constitutional interpretation and not statu-
tory interpretation, we need not consider whether TERC gave
the legislative history sufficient weight and consideration. An
appellate court is not obligated to engage in an analysis that is
not necessary to adjudicate the case and controversy before it.
Holdsworth v. Greenwood Farmers Co-op, 286 Neb. 49, 835
N.W.2d 30 (2013).
VI. CONCLUSION
We affirm TERC’s finding that Central is not liable for addi-
tional tax obligations for real property owned by Central and
that any such tax obligations are included in Central’s annual
payment in lieu of tax. To the extent that TERC’s order can be
interpreted to mean that a lessee’s property tax obligation is
included in Central’s payment in lieu of tax, it is vacated and
is of no force and effect. The issue of a lessee’s liability was
not before TERC.
affirmed in part, and in part vacated.